International Shipping Essentials
Why should I ship to other countries?
Committing to shipping your products internationally may seem intimidating. But think about it this way: the idea of starting an ecommerce business in the first place was intimidating, right? And if you’re considering shipping overseas, then you clearly passed that test with flying colors.
Many online retailers in the U.S. hesitate to sell products to other countries because they think the costs outweigh the potential revenue. Spoiler alert: they’re wrong.
When you conduct thorough research and make well-informed decisions, you can successfully reach customers all over the globe.
Ready to learn the basics of ecommerce international shipping? Let’s go!
Part 1: Products and Packaging
Confirm Product Shippability
Of course you’re aware of the package restrictions for your domestic shipments. But when it comes to shipping overseas, weight and size limits will often vary by the destination. For example, if you ship to another country via USPS, the maximum package weight accepted varies between 4lbs and 70lbs, depending on destination.
There are also several product categories carriers will just straight up not transport internationally under any circumstances. For instance, you can’t send nail polish to another country via USPS. And FedEx won’t ship fine jewelry overseas.
On top of that, every country has its own unique restrictions. Did you know you can’t ship playing cards to Denmark, Greece, or Spain? Or that you can’t send bells to Italy or eyeglasses to Uruguay?
Prepare Packages for Passage
Each box, envelope, and mailer tube you ship is going to have plenty of pit stops on its way to its final destination. Most of your domestic orders will only call sorting centers and trucks temporary homes. But your international orders will have the joy of traveling by plane and boat, too. This means you’ve got to be extra obsessive about how you pack cross-border shipments.
Evaluate the weight, value, and fragility of the contents of each package. Remember that liquids and powders need special packaging when being transported overseas. Consider whether the items are subject to any international regulations and thus have additional packaging requirements.
Your package is about to embark on a long journey — make sure it gets there in one piece.
Part 2: Taxes, Duties, and Documentation
Value Added Tax (VAT) and Duties
- Value Added Tax (VAT) [val-yoo ad-ded taks] — also known as goods and services tax (GST) — is a fee merchants are charged on every cross-border sale. It’s calculated using a fixed percentage that applies to every shipment, regardless of contents. You can think about it like a sales tax. Total VAT varies between countries.
- A duty [doo-tee] — also known as a tariff — is a tax retailers must pay when selling products internationally. Like VAT, each country uses a unique percentage to calculate duties. However, instead of using a single, set percentage, duties are calculated based on the value and quantity of the items being imported plus the cost of shipping and any insurance.
There are two types of duties: delivery duty paid (DDP) and delivery duty unpaid (DDU). With DDP, the company is responsible for all applicable duties and fees. The total is paid upfront by the carrier, and the retailer receives a bill.
In the case of DDU, the recipient (i.e. your customer) must pay the duty. If you go with the second route, make sure it’s extremely, exceptionally, extraordinarily clear on your checkout page!
*Pro Tip: Some countries charge only VAT, others collect only duties, and a handful of countries impose neither.
Determine how much a country’s duties and VAT would affect your overall costs. Once you understand the financial impact, you’ll know how to adjust your prices for shoppers in those countries. Or you’ll realize it simply isn’t worth it to sell to that country.
Required Customs Documents
- Commercial Invoice. Used to appraise the value of products and calculate customs duties and taxes. Document must list the following: retailer’s name and address; recipient’s name and address; item quantities, descriptions, and prices; terms of sale and payment; and mode of transport.
- Export Packing List. A more comprehensive version of a domestic shipment packing list. In addition to the details included on a standard packing list, an export packing list specifies the mode of transport, carrier information, and the weight, dimensions, quantity, and type of each package in the shipment.
- Certificate of Origin. Confirms country where products in shipment were produced, manufactured, and/or obtained. Must be signed by retailer and, in some instances, certified by local chamber of commerce.
Part 3: Shipping Carrier Comparison
For U.S. retailers, there are four main carriers: USPS, UPS, FedEx, and DHL. Each carrier has its own advantages:
- USPS — Typically the least expensive option for ecommerce international shipping
- UPS — Has offices in nearly every country, which means UPS will manage shipping from your warehouse straight through to delivery
- FedEx — Specializes in urgent delivery options, such as next-day and 2-3 day delivery
- DHL — Experts in international customs
As you evaluate your options, determine two things: 1) which aspects you’re willing to compromise on, and 2) what is non-negotiable. When you know how flexible you are on things like costs and delivery speed, you can more easily choose the right carrier.
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